Closed-loop vs open-loop gift cards: What shopping centres should know

Introduction

Not all gift cards are the same. Some can be spent almost anywhere, while others are tied to specific destinations. Understanding the difference between closed-loop and open-loop cards is key for shopping centres that want to increase sales and loyalty.

What is an open-loop gift card?

Open-loop gift cards are branded with global payment networks such as Visa or Mastercard. They function like prepaid debit cards and can be used anywhere those logos are accepted.

For shoppers, the big draw is flexibility. One card can cover groceries, fuel, online shopping, or a meal out. This makes open-loop cards popular as all-purpose gifts, or in situations where the giver wants maximum freedom for the recipient.

But for shopping centres, this flexibility can be a disadvantage. Money loaded onto an open-loop card often leaves the mall and gets spent at competing retailers or online. Add in higher production costs, regulatory hurdles, and the risk of customer confusion over fees, and the model looks less attractive for centres that want to keep spend local.

Pros: wide acceptance, simple for the recipient, good for one-off or last-minute gifts.

Cons: higher costs, more regulation, limited loyalty impact, spend often leaks outside the centre.

What is a closed-loop gift card?

Closed-loop cards are tied to a defined environment, such as a shopping centre or a single retail brand. They carry the branding of that place and can only be redeemed within participating stores.

This format offers more control. The centre decides the design, seasonal artwork, and messaging, which makes the card part of the overall marketing strategy. Operationally, closed-loop cards are less costly to issue, easier to reconcile, and less burdened by financial regulation.

For consumers, closed-loop cards can feel more personal and intentional. They encourage visits to a specific destination and often create an experience rather than just a transaction. For shopping centres, they are an effective way to increase footfall, strengthen tenant sales, and reinforce brand identity.

Pros: lower costs, brand control, keeps spend within the centre, faster to launch.

Cons: limited use outside the defined environment.

Which type do customers prefer?

Recent findings show that 64% of gift cards sold in the U.S. are closed-loop, making them the majority and most popular type. Only 15% are open-loop formats, which highlights a strong consumer preference for destination-specific options.

On the growth front, the global gift card market is surging, from around USD 1.3 trillion in 2024 to an estimated USD 1.54 trillion in 2025, signaling an 18.5% year-over-year increase.

By 2034, forecasts suggest the market could swell to USD 3.8 trillion, with closed-loop segments commanding significant share: accounting for around 39.5% of the market in 2024.

These figures show that closed-loop gift cards are not just holding steady—they’re growing fast, powered by consumer preference, loyalty integration, and destination marketing.

This shift reflects how shoppers view gift cards: not only as financial tools but also as experiences. A card tied to a shopping centre feels like an invitation to visit, browse, and enjoy. That makes closed-loop cards more effective at driving both short-term sales and long-term loyalty.

Why do closed-loop cards benefit shopping centres?

Closed-loop cards are particularly well suited to the needs of shopping centres. They:

1. Higher retention of value: Less leakage to other retailers means more of the customer’s spend benefits your tenants.
2. Brand synergy: You decide the design, messaging, and how cards tie into broader marketing campaigns or seasons.
3. Enhanced loyalty: Customers often spend more than the card’s value during their visit—boosting overall sales.
4. Speed to launch: Without hefty compliance demands because of their restricted nature, closed-loop programs can be live in weeks, not months.
5. Convenient experience: In some markets, closed-loop cards don't require the same identity confirmation under Know Your Customer (KYC) rules as open-loop cards, making the process of buying a card much smoother for consumers.

These factors combine to make closed-loop cards more than a financial tool. They are a marketing channel, a loyalty driver, and a brand asset.

Conclusion

Both open-loop and closed-loop cards have their place, but for shopping centres the choice is clear. Closed-loop cards deliver stronger control, lower costs, and a direct link between the customer and the centre. Open-loop formats may offer flexibility, but they rarely support a long-term retail strategy.

Interested in how closed-loop gift cards can drive loyalty, revenue, and footfall at your centre?

Read more about integrating gift cards into your loyalty program here.